Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-run equilibrium Long-run equilibrium AD Real GDP Real GDP Aggregate price level In the short-run, the price level In the long-run, the price level and and increases increases GDP GDP decreases decreases increases increases stays the same stays the same decreases decreases stays the same stays the same
Short-run graph Long-run graph LRAS LRAS SRAS SRAS Short-run equilibrium Long-run equilibrium AD Real GDP Real GDP Aggregate price level In the short-run, the price level In the long-run, the price level and and increases increases GDP GDP decreases decreases increases increases stays the same stays the same decreases decreases stays the same stays the same
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter9: Classical Macroeconomics And The Self Regulating Economy
Section9.3: The Self Regulating Economy
Problem 3ST
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Question
The graphs illustrate an initial equilibrium for the economy. Suppose that the government increases spending.
Use the graphs to show the new positions of aggregate demand (AD), short‑run aggregate supply (SRAS), and long‑run aggregate supply (LRAS) in both the short run and the long run, as well as the short‑run and long‑run equilibriums resulting from this change. Then, indicate what happens to the
explain the second image as well and which is right.
![Short-run graph
Long-run graph
LRAS
LRAS
SRAS
SRAS
Short-run equilibrium
Long-run equilibrium
AD
Real GDP
Real GDP
Aggregate price level](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fae214f62-6c96-4dad-92ba-8896881af678%2F716086f1-bdc1-4062-b10f-1025fc1915ab%2Fglw3kmc.png&w=3840&q=75)
Transcribed Image Text:Short-run graph
Long-run graph
LRAS
LRAS
SRAS
SRAS
Short-run equilibrium
Long-run equilibrium
AD
Real GDP
Real GDP
Aggregate price level
![In the short-run, the price level
In the long-run, the price level
and
and
increases
increases
GDP
GDP
decreases
decreases
increases
increases
stays the same
stays the same
decreases
decreases
stays the same
stays the same](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fae214f62-6c96-4dad-92ba-8896881af678%2F716086f1-bdc1-4062-b10f-1025fc1915ab%2Foqd3gh9.png&w=3840&q=75)
Transcribed Image Text:In the short-run, the price level
In the long-run, the price level
and
and
increases
increases
GDP
GDP
decreases
decreases
increases
increases
stays the same
stays the same
decreases
decreases
stays the same
stays the same
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